What should I do if I overspend in my budget?
When you go over budget, don't stop budgeting! Just look at how much you went over, and make sure your non-negotiable bills are paid. Next, you should cut back or delay a discretionary expense, transfer funds from a less important spending category, or tap an emergency fund. Finally, determine if the overage was a one-time event or if you need to adjust the spending limit for that category.
What to do when you overspend
If you overspend, don't consider it a failure of your entire budget. Determine how much over budget you went, and what expense account it was charged against. Minor overspend doesn't need the same reaction as a major one.
1. Cover your essential expenses first. Do you have enough money to pay for rent or a mortgage, utilities, food, transportation, insurance, minimum debt payments, and any other bills that need to be paid before the next check comes in?
Look at what other expense categories you still have room in. Maybe you can put off buying that thing you intended to buy, cook dinner tonight rather than ordering out, hold off on going to the movies, or spend less on your shopping. With the buffer available, you could pay for what you need to spend. That's probably preferable to charging the excess, which would just leave you deeper in debt.
Another option is to transfer funds between categories. For example, if you want to spend more on groceries, take some from entertainment instead of reducing the amount you put away for rent or an annual bill. Remember to record any changes so your category balances are correct.
When the crisis has passed, figure out why it occurred. Was it an unforeseen expense? Did you forget an annual bill? Were you shopping emotionally? Did social pressure push you over? Or maybe you set your budget too tight for this particular category? If it was an unusual occurrence, then you don't necessarily need to do anything permanently. But if it's becoming a regular occurrence, maybe that category needs more money. Maybe it needs to be broken into smaller categories, or a different checking account might be better suited.
If there is any chance of it happening again in the near future (next month, say), then you could consider adding a little bit of wiggle room or opening up a sinking fund for that specific expense. You should review your budget every week, so you are able to make smaller adjustments earlier on. The purpose of a budget is to assist you when you need to deal with decisions and variations, not to penalize you because you had a bad month.